Aspect Medical Systems shareholders sue to block Covidien buyout

Shareholders of Aspect Medical Systems Inc. filed a lawsuit to block a proposed $210 million acquisition by Covidien.

The deal would see the Mansfield, Mass.-based medical devices giant pay $12 per share for Aspect, a Norwood, Mass.-based maker of brain monitoring equipment that measures the effects of anesthesia and sedation.

The lawsuit accuses Aspect’s management of breaching its fiduciary duty by agreeing to the merger, alleging that the takeover price is unfair in seeking to take advantage of the global recession to snap up the company at a price that’s far below the actual value of the company.

But if the deal is consummated, Covidien will pay a roughly 56 percent premium over Aspect Medical’s $7.67 share price as of market close Sept. 25. Aspect shares have plunged since a reaching $37 per share in 2006; news of the deal Sept. 28 sent that number to $11.90, just under its 52-week high.

The company posted net income of $11.1 million on sales of $99.3 million last year. During the second quarter, Aspect reported sales of $24.9 million, down slightly from $25.2 million during the same period last year. And although net income plummeted from $119 million during the 2008 second quarter to $307,000 during the three months ended July 4, operating margins improved to 2.5 percent, compared with -3.8 percent on a nearly million-dollar loss during Q2 2008.

The buyout announcement came nearly four months after Aspect Medical narrowly avoided a nasty proxy fight by offering a seat on its board of directors to a trio of dissident shareholders from First Biomed LLC.

The investment firm had pushed for the creation of what it called a “special committee of independent directors to study ways to optimize the company’s capital structure and otherwise maximize stockholder value,” according to a Securities and Exchange Commission filing.

The ensuing kerfuffle forced Aspect Medical Systems to delay its annual meeting, before agreeing to put First Biomed’s Vincent Scialli, Jon Biro and Melvin Keating on its board.

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